O2 Customers See Value in RFID-enabled Phones

The majority of participants in a six-month trial, recently undertaken by the British cellular service provider, say they appreciated the unique applications made possible by the handset's NFC technology.

Sep 04, 2008—In late 2007, British cellular service provider O2 UK launched a six-month technology trial to gauge consumer interest in and comfort with using RFID-enabled mobile phones to make fare payments to access the London subway, pay for goods at select retailers and access information over an Internet connection. The results are now available, says Claire Maslen, head of O2's Near Field Communication (NFC) department, and they are encouraging.

O2 brought together a number of vendors to convene the trial, including handset manufacturer Nokia, which provided its 6131 phone to the 500 trial participants. The phone includes an NFC module, which employs a standard 13.56 MHz passive RFID protocol to carry out its payment and data-collection functions (see O2 Subscribers Use Phones to Make Purchases, Access Info).

Responding to a post-trial survey, 78 percent of participants indicated that based on their experience using the Nokia phone, they would consider partaking in NFC-based services made available through their cell phone provider. But enthusiasm for the payment function, Maslen says, was stronger among the 275 participants whose test phones could be utilized only for making subway fare payments, than it was for the 225 whose phones also carried the Visa payWave application for making contactless debit card payments at select retailers outfitted with RFID interrogators. The weaker interest among the payWave subset, she notes, could be due to their hesitancy to embrace a new approach to making payments.

"Consumers here have been told to use PIN-and-chip payments for so many years," Maslen explains, "and then contactless [RFID-based] cards were introduced, and now they have contactless on their mobile. I think the lower percentage has to do with confidence levels and what we are used to using. Here, using the Oyster [contactless] card is second nature; if you use a paper ticket to get on the Tube, people look at you funny."

In other words, consumers are used to the approach of holding an RFID-based Oyster payment card up to a turnstile in order to enter the subway system—in fact, more than 10 million British consumers currently use Oyster cards. The trial participants were much more at ease with the concept of holding their mobile phones up to the reader embedded in the turnstiles, Maslen says, compared with the idea of using their phones to make payments at merchant locations, where consumer are accustomed to swiping the magnetic stripe on their debit cards, then keying in a code to authenticate the purchase.

But consumers in the United Kingdom are slowly getting used to employing RFID-based cards such as Visa' payWave, she says, and familiarity with those cards will make them more comfortable using their mobile phones in the same manner. "If we did this trial in a year's time, that figure of 47 percent interest could increase," she predicts.